The determinants of digital circular economy innovation and the ripple effect on competitiveness and social welfare

Purpose This paper aims to examine the role of market competition, AI adoption maturity, and consumer pressures significantly in frugal innovation in the manufacturing sector. It also explores the potential impact of market competition and consumer pressures on AI adoption maturity and the impact of these interactions on social impact. Design/methodology/approach Data was collected from 211 managers and specialists in manufacturing firms and analyzed with Smart PLS software. Findings This study revealed that knowledge transfer, supply chain integration and corporate social responsibility significantly impact digital CEI. The study also confirms that digital CEI contributes to enhancing the competitive capabilities of companies that adopt it. It also found that the digital CEI is significant for improving the welfare of society. Originality/value This study makes significant advancements in both the theory and literature, adding new dimensions to the circular economy theory by analyzing the drivers and performance of the digital CEI. The findings enrich the theory of digital innovations by employing social well-being and organizational competitiveness as critical performance indicators for an innovative digital circular economy. Moreover, it provides valuable insights to management practitioners and organizations that seek to foster CEI in their business.